Musk details a few nodes in production that had been causing trouble.

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Since Tesla's Model 3 production began in July 2017, the company's quarterly financial results have been very alike. Has Tesla produced the number of cars it said it would last quarter? (No.) Is Tesla burning through a whole lotta cash? (Yes.) Is Tesla still making progress on pushing out cars? (Yes.) Will Tesla be in the black again ever? (CEO Elon Musk offers a date one or two quarters into the future.)

Further Reading

Such is the case today. From a previous press release, we knew that in the first quarter of 2018, Tesla did not reach its stated goal of 2,500 Model 3s off the line per week. But it got close enough that investors weren't scared off, delivering 9,766 Model 3s and hitting just north of 2,000 such vehicles in the last week of the quarter. In today's financial statement (PDF), the company said it held that weekly number for two more weeks before stopping production in mid-April to "further increase production."

On the accompanying call, Musk detailed some of the changes that had been made at the factory to speed along Model 3 turnover. "We did go too far on the automation front and automated some very silly things," he said.

One example the CEO offered: originally the Model 3 included "fiberglass mats" of fluff on the top of the battery pack, and the company had a "FluffBot" that would pick up fluff and place it on the battery pack. "Machines are not good at picking up fluff; human hands are very well suited for that," Musk said, "FluffBot would frequently just fail to pick up the fluff." Tesla ended up testing whether the fluff made any difference in cabin noise, found that it did not, and dispensed with the FluffBot.

Musk also said that, in some cases, the Model 3's manufacture process was over-generalized or added unnecessary steps. The CEO said, currently, the battery pack is no longer a bottleneck for production: it's churning out about 3,000 Model 3 packs per week, and the time to produce a battery pack has decreased from 7 hours to 70 minutes. Now, Musk said, general assembly is the issue.

Despite all this, Tesla is clearly not giving up on making its factories increasingly automated. "In the end, this is all about having factories that are producing the world's highest-quality cars as quickly and as cost-effectively as possible," its financial statement said, "and with as close to zero injuries as we can possibly get. Our automation strategy is key to this, and we are as committed to it as ever."

Still, the company showed evidence in its financial letter of hedging on its promise to produce 5,000 Model 3s per week by the end of the second quarter of 2018. "We continue to target Model 3 production of approximately 5,000 per week in about two months, although our prior experience has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time because of the exponential nature of the ramp," the company wrote in its Wednesday financial statement.

The bottom line(s)

Tesla is also still burning through piles of money. The company's net loss in Q1 was $785 million, with $710 million of that attributable to shareholders. Last quarter, Tesla's loss attributable to shareholders was $675 million. All this is on top of record revenues for the company—just under $2.6 billion this quarter in automotive sales alone compared to just over $2.4 billion last quarter and slightly more than $2 billion in Q1 2017. If revenues generated by auto leases, Tesla's solar and battery businesses, and other Tesla services are included, the company made $3.4 billion in Q1 2018 (but it spent more than it made).

In its statement today, it seemed that a lot of the cash Tesla has used is going to upgrading its facility for faster Model 3 production—the same kind of spending the company had to do in advance of the Model S and Model X.

Tesla purchased a German automation engineering firm in 2016 to help it build out its Model 3 production lines. The company said in February that machinery from that firm had been ordered and was on its way to Tesla's factories. Tesla reiterated that in its press release today, saying: "We now expect to reach a [battery]-module production rate of 5,000 car sets per week even before we install the new automated line designed and built by Tesla in Germany. Still, once installed, this new automated module line should significantly lower manufacturing costs."

Automation

Tesla has struggled with its Autopilot endeavors in recent months, after a fatality and questions surrounding when "full automation" would be ready for users. In today's financial call, Musk said that "full autopilot" would be ready "from a technical standpoint... by the end of next year." However, he accused journalists of overhyping fatalities, causing regulators to balk at approving new systems.

"The thing that's tricky about autonomous vehicles is it doesn't reduce the fatality rate to zero," Musk said, adding that millions of deaths happen in non-autonomous cars per year, but they rarely end up in headlines. "It's really incredibly irresponsible of any journalist with integrity to lead people to believe that a Tesla with autonomy is less safe." [Editor's note: A fatality incurred with new technology will always be news.]

Still, Musk added that Tesla will start publishing quarterly safety statistics. He also noted that he didn't think people were getting in accidents because Tesla's system is overselling its capabilities with the name "Autopilot."

"When there is a serious accident... people think the driver thought the car was fully autonomous." Instead, Musk said, "it is almost always, in fact maybe always, that it is an experienced driver."

The other businesses

For the most part, Musk shied away from giving too many pronouncements on Tesla's other endeavors. He noted that Tesla had about 2,000 reservations for Tesla Semis. ("It's not really something we've tried to sell," he said, adding that a fair criticism at this point is Tesla's failure to turn a profit, which the company is trying to fix this year.)

Musk also said capital investment in Model Y production would not be significant until 2019. He poked fun at a new design-patent lawsuit that was filed against Tesla yesterday in Arizona. He said it was a "laughable lawsuit from some company called 'Nikola.' They're, like, suing us for the way the truck looks, which is absurd; nobody's buying a Tesla for the way that it looks." Musk also, at one point in the call, said Tesla's Semi would get "more than 500 miles" of range.

In response to a question about whether there would be any value in Tesla working with SpaceX's satellite broadband endeavors, Musk said, "There’s interesting things you could do. The car's got a lot of computing power... I haven't really thought about it, but probably there is."

Finally, Musk said that he didn't really care about publishing Model 3 production rates before the end of the quarter to satisfy day traders. "I am not here to convince people to buy our stock. Do not buy it if you think volatility is scary," the CEO said. With Tesla falling four percent in after-hours trading as of this writing, some stock pickers may have taken Musk's advice.

The recap here fails to mention that Musk abrubtly ended the conference call in the middle of his own CFO answering a particularly tough question. Which is when he added in his "not here to entertain daytraders" comment, which sent the stock spiraling downwards.

What about the Nissan Leaf's ProPilot? Are we going to make pedantic arguments about semantics and hypothetical customers who are getting confused by its capabilities? "I thought it was Professional AND a Pilot, I was clearly misled."

The recap here fails to mention that Musk abrubtly ended the conference call in the middle of his own CFO answering a particularly tough question. Which is when he added in his "not here to entertain daytraders" comment, which sent the stock spiraling downwards.

Stock started spiraling downwards within a minute or two of him complaining about boring questions and refusing to answer a couple of analysts questions, and then switching over to a long chat with the YouTube guy. Interestingly, I saw several Tesla bears commenting that the YouTube guy's questions were good ones.

Another goal that will be missed. Sometimes I cannot tell who is the bigger liar - Musk or Zuckerberg.

HAHAHAHAHAHA.....so they can build 2000 cars a week, hmmmmm 8000 a month......96000 a year..........hmmmmmm...they have sold 500000 model 3's.....so they are sitting on a FIVE YEAR BACKLOG AS OF NOW.

musk has NO idea about MASS production...and it shows.....5 years to build out the backlog???? that means NO NEW SALES till 2023......

what a business plan....

If you expect the production rate to remain constant for the next 5 years, then sure, it's a 5 year backlog. If you think the production rate is going to remain constant for the next 5 years, then you're worse at estimating timelines than Elon is, just in the opposite direction.

Another goal that will be missed. Sometimes I cannot tell who is the bigger liar - Musk or Zuckerberg.

HAHAHAHAHAHA.....so they can build 2000 cars a week, hmmmmm 8000 a month......96000 a year..........hmmmmmm...they have sold 500000 model 3's.....so they are sitting on a FIVE YEAR BACKLOG AS OF NOW.

musk has NO idea about MASS production...and it shows.....5 years to build out the backlog???? that means NO NEW SALES till 2023......

what a business plan....

If you expect the production rate to remain constant for the next 5 years, then sure, it's a 5 year backlog. If you think the production rate is going to remain constant for the next 5 years, then you're worse at estimating timelines than Elon is, just in the opposite direction.

Plan is to get to 5000/week by July. Then they'll make a second copy of the line once it's proven out and you'll have 10000/week.

Another goal that will be missed. Sometimes I cannot tell who is the bigger liar - Musk or Zuckerberg.

HAHAHAHAHAHA.....so they can build 2000 cars a week, hmmmmm 8000 a month......96000 a year..........hmmmmmm...they have sold 500000 model 3's.....so they are sitting on a FIVE YEAR BACKLOG AS OF NOW.

musk has NO idea about MASS production...and it shows.....5 years to build out the backlog???? that means NO NEW SALES till 2023......

what a business plan....

Correct me if I'm wrong, but they haven't "sold" the backlogged model 3s yet, they've just taken refundable $1000 deposits on them. When cars are built and ready to be delivered, the owner pays the rest of the money. Each new model 3 they build is a new sale, and therefore new profit.

Also, why would you assume that their manufacturing rate won't increase? They made about 2500 Model 3s total in Q4 2017. Now they're making almost that many every single week.

The recap here fails to mention that Musk abrubtly ended the conference call in the middle of his own CFO answering a particularly tough question. Which is when he added in his "not here to entertain daytraders" comment, which sent the stock spiraling downwards.

Stock started spiraling downwards within a minute or two of him complaining about boring questions and refusing to answer a couple of analysts questions, and then switching over to a long chat with the YouTube guy. Interestingly, I saw several Tesla bears commenting that the YouTube guy's questions were good ones.

Yes, he ended the professional investor / majority stakeholder portion of the Q&A and switched over to Youtube questions, which they had setup for retail investors.

The recap here fails to mention that Musk abrubtly ended the conference call in the middle of his own CFO answering a particularly tough question. Which is when he added in his "not here to entertain daytraders" comment, which sent the stock spiraling downwards.

Stock started spiraling downwards within a minute or two of him complaining about boring questions and refusing to answer a couple of analysts questions, and then switching over to a long chat with the YouTube guy. Interestingly, I saw several Tesla bears commenting that the YouTube guy's questions were good ones.

Yes, he ended the professional investor / majority stakeholder portion of the Q&A and switched over to Youtube questions, which they had setup for retail investors.

The recap here fails to mention that Musk abrubtly ended the conference call in the middle of his own CFO answering a particularly tough question. Which is when he added in his "not here to entertain daytraders" comment, which sent the stock spiraling downwards.

Stock started spiraling downwards within a minute or two of him complaining about boring questions and refusing to answer a couple of analysts questions, and then switching over to a long chat with the YouTube guy. Interestingly, I saw several Tesla bears commenting that the YouTube guy's questions were good ones.

Yes, he ended the professional investor / majority stakeholder portion of the Q&A and switched over to Youtube questions, which they had setup for retail investors.

Ok, I misunderstood. They had a couple questions after YouTube guy, but those were all analysts I think. Switched over to the chart when i saw people talking about it. Pretty epic.

Would be interesting to see volume on that graph. After hours teasing tends to be sparse so one miffed investor dumping some shares after being cut off could easily move the price during after hours but if it represents .1% of outstanding shares it's hardly a significant event.

I worked for a company that was 95% institutionally held, as long as those big investors were confident in the direction of the company our CEO didn't care a hill of beans about the day to day or hour to hour price of the stock because he knew we could always access funding sources other than the open market. I'm pretty sure Musk was just expressing the same attitude in his own high functioning manner.

"General assembly" is an awfully big issue. The way this works is that once you fix a bottleneck (in this case batteries) the bottleneck moves somewhere else. It keeps moving and you can't really do a great job of finding the bottlenecks in advance of them becoming the bottleneck.

"General assembly" is an awfully big issue. The way this works is that once you fix a bottleneck (in this case batteries) the bottleneck moves somewhere else. It keeps moving and you can't really do a great job of finding the bottlenecks in advance of them becoming the bottleneck.

Welcome to manufacturing.

I thought they said they were doing periodic stockpiling along the line so that they could test out higher speeds on various sections that were not the current bottleneck.

"General assembly" is an awfully big issue. The way this works is that once you fix a bottleneck (in this case batteries) the bottleneck moves somewhere else. It keeps moving and you can't really do a great job of finding the bottlenecks in advance of them becoming the bottleneck.

Welcome to manufacturing.

And sometimes you discover you didn't need the sound insulation mats, saving you a process, staff, and a few dollars per unit. Those few dollars add up. Your vehicle also gets marginally better range from losing a few grams.

Other times you discover that you *did* need the insulation mats you left out, and you add a process, add staff, and add a few more dollars per unit, and your range decreases ever so slightly.

There's never perfection in a complex collection of processes, only iteration.

Read the article, guys. This driver got the impression that his Model S was able to do more than it really can from SOMEWHERE, and the only place it originally came from was Tesla Motor's marketing.

I honestly believe if they had named it "Assist", and marketed it as simply intelligent cruise control (which is what "autopilot" is), people wouldn't be doing stupid things while using it.

Still, were it up to me, I'd take away all vehicles ability to auto-steer until full level 5 is achieved. People in general are just not able to be responsible ENOUGH to avoid doing stupid things (even though they know they should) when they start to think that most of the task they're supposed to focus on is already "being done" for them.

Failing that, the decision to "auto steer" shouldn't be on the driver, but on the environment into which they drive, meaning once they hit "autonomous driving only" areas, they can't steer it themselves, and can't be allowed to LEAVE that control zone until the car is satisfied they're ready to do that.

While autonomous vehicles are going to be part of our future, human nature always alters the anticipated trajectory of any new tech in some way. I don't expect that the current "levels" of autonomy will be more than convenient markers on the road toward full autonomy. I expect that they'll fall to three levels: None, semi and full.

None is anything that doesn't have auto steering (other than say auto-parallel park). Semi means the driver has to actually steer at most of the time, but must be be hands-off, eyes-off at other times in controlled traffic regions, and must be hands-on, eyes-on to leave the controlled region. Full means no steering wheel at all, since the driver would never have to do that.

Right now, Tesla's offerings under that classification system are, technically, "None", because the instructions are hands-on, eyes-on while using it, and there are no situations where it can go hands-off, eyes-off. (So far, there are none anywhere in the world yet.)

Tesla marketed their car as being able to do more than it really can, and only started walking that back stronger when it became patently obvious that it wasn't what they had intimated. Unfortunately, the impression that prior marketing made has stuck. They really need to do much, much more to walk it back. Were it up to me (which it isn't), I'd disable the feature entirely until it can be replaced with a Level 5 system (or a level 4 if autonomous driving only regions become a thing before then and they make sure the driver is hands-on, eyes-on before leaving an autonomous driving region).

Musk saying "don't do that" isn't enough for autonomous vehicle enthusiasts to take the proper precautions with their non-autonomous vehicles. And human nature does it to the rest for those many who can't overcome the natural inclination to have one's mind wandering while they think something else is doing what they need to be doing while at the wheel.

Given human nature, and our tendency to assume capabilities that don't actually exist, allowing a car to steer itself that isn't hands-off, eyes-off capable to begin with (outside of a parking situation) is just asking for trouble.

While the £70,000 car was in motion, he chose to switch on the supercar's autopilot function before moving across to the passenger seat and leaving the steering wheel and foot controls completely unmanned.

While the £70,000 car was in motion, he chose to switch on the supercar's autopilot function before moving across to the passenger seat and leaving the steering wheel and foot controls completely unmanned.

While the £70,000 car was in motion, he chose to switch on the supercar's autopilot function before moving across to the passenger seat and leaving the steering wheel and foot controls completely unmanned.

TL;DR - some owners really believe the over-hype.

If only the feature was called ProPilot instead of AutoPilot then this moron would have never been born/never attempted this stunt.

While the £70,000 car was in motion, he chose to switch on the supercar's autopilot function before moving across to the passenger seat and leaving the steering wheel and foot controls completely unmanned.

TL;DR - some owners really believe the over-hype.

Has nothing to do with the hype around Autopilot.

"Active Lane Control" was enough for people to climb out of the driver seat on the Autobahn. This one's of a guy in the passenger seat, when it first came out there as another video of people climbing into the backseat (I think Ars might have covered it but it was years ago so I can't say for sure.)

Still, were it up to me, I'd take away all vehicles ability to auto-steer until full level 5 is achieved. People in general are just not able to be responsible ENOUGH to avoid doing stupid things (even though they know they should) when they start to think that most of the task they're supposed to focus on is already "being done" for them.

You make Musk’s point. It’s totally unethical to block improvements to safety merely because it doesn’t move you to zero.

A lot of people - and your post suggests you are one of them - have absolutely no experience with Tesla’s Autopilot functionality, including the information presented both at the time the functionality is enabled AND how it actually operates by constantly reinforcing what proper behavior is from a driver.

Let’s just consider those things:

1. Autopilot functions require a driver to proactively enable them in the Settings. This includes warnings and clear language around the system limitations.

2. The car restricts opportunities to enable the functionality to times when the software detects conditions which would permit Autopilot functions to operate.

3. There are two levels of activation. First, to activate the Adaptive Cruise Control. This functionality is available across almost every mid-tier car on up available to purchase today. Second, Autosteer is the functional equivalent of lane keeping features available on many current cars. In my experience it’s superior, but essentially in the same category of functionality.

4. The car detects when the driver has not stayed actively engaged in the steering through detection of force on the steering wheel. It then warns the driver and, if the warning is ignored, completely disables the function until the car is restarted.

Besides just convenience, the overall Autopilot functionality significantly reduces the likelihood of a frontal impact or - as demonstrated by some owners shared videos - being side impacted by other cars who drift into the Tesla’s lane.

If you want to have a silly argument about the term “Autopilot” confusing drivers, you better be prepared to understand how willfully negligent a driver would have to be to misunderstand the limitatations and functionality of the features.

While the £70,000 car was in motion, he chose to switch on the supercar's autopilot function before moving across to the passenger seat and leaving the steering wheel and foot controls completely unmanned.

TL;DR - some owners really believe the over-hype.

If only the feature was called ProPilot instead of AutoPilot then this moron would have never been born/never attempted this stunt.

Maybe he wouldn't have (though it's still a stupid name), but the word "autopilot" existed before Tesla, and has a certain connotation because of that. Tesla chose to call their feature that for a reason - it was effective marketing, even if it doesn't reflect reality.

Has Tesla produced the number of cars it said it would last quarter? (No.) Is Tesla burning through a whole lotta cash? (Yes.) Is Tesla still making progress on pushing out cars? (Yes.) Will Tesla be in the black again ever? (CEO Elon Musk offers a date one or two quarters into the future.)

That is an uncanny resemblance to the Netflix documentary about Nikola Tesla